Blog > 2021 > November > Did You Receive A Bank Levy?
If you cannot pay certain taxes or other debts, you might receive a bank levy. The most common creditors that issue bank levies are the Internal Revenue Service and the Department of Education. If you owe child support arrearages, the Department of Revenue could also distribute a bank levy. However, certain funds in your account are protected. And you have ways to stop a bank levy for those funds that do not have protection.
A bank levy is a document that instructs your bank to freeze the funds in your account. The bank is obligated to forward the funds in your account to the creditor who placed the levy. The creditor forwards the request to your bank, along with the judgment against you. In some cases, the creditor does not need a judgment. For example, the Internal Revenue Service can send the levy to the bank to freeze your account.
You do not necessarily get a warning of a bank levy. You might not find out until you try to use the funds in your account. You can dispute the bank levy.
Creditors cannot take money from specific income sources deposited into a bank account. When your bank reviews the levy, it must determine how much money came from these sources, usually government payments such as federal employee pensions and Social Security payments. However, if you owe money to a government entity, such as the Internal Revenue Service, the government entity has more leeway in accessing protected funds.
A bank levy can stay in place until you satisfy the debt. You do have some choices. You can dispute the levy if a creditor made a mistake on the amount, if you already paid the debt, or if you are a victim of identity theft and can prove that someone else received the funds.
Additionally, old debt has a statute of limitations. That means that a creditor can only attempt collections, including bank levies, for a certain number of years. Different types of debt have different time frames for collections. You can also dispute a bank levy if a creditor did not serve you legally or adequately.
You can also attempt to negotiate payments in exchange for a release on the levy. The creditor could lift the levy if you can agree on an amount, payment dates, and a time frame to pay the debt.
Finally, you could file Chapter 13 or Chapter 7 bankruptcy to stop a levy in its tracks. It might give you enough time to work with the creditor or to pay the creditor off.
If you received a bank levy or a creditor notified you that it will be filing a bank levy, contact an Encino bankruptcy lawyer for more information on stopping a bank levy, including filing bankruptcy and which bankruptcy is best for you.
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